Calculation of Component Prices

Component Prices are calculated using monthly average
dairy product prices for the month in question. In the
folowing example, component prices for Aug 2014
is calculated by using the monthly (weighted) average of
different weekly NASS prices. They were then released on
Aug 29, 2014

NASS Monthly Average Prices

The component prices calculated in the section use monthly
average U.S. NASS survey prices. These monthly average prices
are calculated by a weighted average.

The monthly average prices used in this section are calculated
from NASS prices for each week.

These monthly average prices are as follows:

AA Butter 2.5206
Cheddar Cheese 2.1074
Dry Whey 0.6880
Nonfat Dry Milk 1.7887

Butterfat Price

(used for Class III and Class IV prices and in making payment to producers)

= (AA Butter Avg – 0.1202) *1.2

= 2.4004 * 1.2

= 2.8805

So, the Announced Butterfat Component Price for Aug 2014 is 2.8805